Tough Times Strain Colleges Rich and Poor

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By TAMAR LEWIN

Arizona State University, anticipating at least $25 million in budget cuts this fiscal year — on top of the $30 million already cut — is ending its contracts with as many as 200 adjunct instructors.

Boston University, Cornell and Brown have announced selective hiring freezes.

And Tufts University, which for the last two years has, proudly, been one of the few colleges in the nation that could afford to be need-blind — that is, to admit the best-qualified applicants and meet their full financial need — may not be able to maintain that generosity for next year’s incoming class. This fall, Tufts suspended new capital projects and budgeted more for financial aid. But with the market downturn, and the likelihood that more applicants will need bigger aid packages, need-blind admissions may go by the wayside.

“The target of being need-blind is our highest priority,” said Lawrence S. Bacow, president of Tufts. “But with what’s happening in the larger economy, we expect that the incoming class is going to be needier. That’s the real uncertainty.”

Tough economic times have come to public and private universities alike, and rich or poor, they are figuring out how to respond. Many are announcing hiring freezes, postponing construction projects or putting off planned capital campaigns.

With endowment values and charitable gifts likely to decline, the process of setting next year’s tuition low enough to keep students coming, but high enough to support operations, is trickier than ever.

Dozens of college presidents, especially at wealthy institutions, have sent letters and e-mail to students and their families describing their financial situation and belt-tightening plans.

At Williams College, for example, President Morton Owen Schapiro wrote that with last year’s negative return on the endowment and the worsening situation since June, some renovation and facilities spending would be reduced and nonessential openings left unfilled.

Many students, increasingly conscious of costs, are flocking to their state universities; at Binghamton University, part of the New York State university system, applications were up 50 percent this fall. But with this year’s state budget problems, tuition increases at public universities may be especially steep. Some public universities have already announced midyear tuition increases.

With endowment values shrinking, variable-rate debt costs rising and states cutting their financing, colleges face challenges on multiple fronts, said Molly Corbett Broad, president of the American Council on Education.

“There’s no evidence of a complete meltdown,” Ms. Broad said, “but the problems are serious enough that higher education is going to need help from the government.”

And as in other sectors, she said, some financially shaky institutions will most likely be seeking mergers.

Nationwide, retrenchment announcements are coming fast and furious, as state after state reduces education financing.

The University of Florida, which eliminated 430 faculty and staff positions this year, was told recently to cut next year’s budget by 10 percent, probably requiring more layoffs. Financing for the University of Massachusetts system was cut $24.6 million for the current fiscal year.

On Thursday, Gov. Arnold Schwarzenegger of California proposed a midyear budget cut of $65.5 million for the University of California system — on top of the $48 million reduction already in the budget.

“Budget cuts mean that campuses won’t be able to fill faculty vacancies, that the student-faculty ratio rises, that students have lecturers instead of tenured professors,” said Mark G. Yudof, president of the California system. “Higher education is very labor intensive. We may be getting to the point where there will have to be some basic change in the model.”

Private colleges, too, are tightening their belts — turning down thermostats, scrapping plans for new gardens or quads, reducing faculty raises.

But many are also increasing their pool of financial aid.

Vassar College will give out $1 million more in financial aid this year than originally budgeted, even though the endowment, which provides a third of its operating budget, dropped to $765 million at the end of September, down $80 million from late June. President Catharine Bond Hill of Vassar said the college would reduce its operating costs, but remain need-blind.

Many institutions with small endowments, however, will probably become more need-sensitive than usual this year, quietly offering places to fewer students who need large aid packages.

At Dickinson College in Pennsylvania, Robert J. Massa, the vice president for enrollment and student life, said that about 200 applicants last year might have been accepted if they had not needed so much financial help, but that that number might rise to 250 this year.

Dickinson’s endowment was $280 million in mid-October, Mr. Massa said, down from $350 million in June. And while more than three quarters of the college’s operating budget comes from student fees, some endowment revenue will have to be replaced.

“Here’s the rub,” Mr. Massa said. “I really don’t think that colleges can afford to increase their tuition price at higher than inflation this year. I don’t think the public will stand for it. What we’ve done in higher education is let our dreams and aspirations dictate our cost structure.”

Most colleges will have a better sense next month of how many students are struggling, when second-semester tuition bills come due.

Paola Aguilar, a sophomore at Shenandoah University in Winchester, Va., is worrying about whether she can afford to return next year.

“My mom became a Realtor last year to try to earn more money, but that didn’t help,” Ms. Aguilar said. “I’ve talked to the people here, and they’ve helped me out a little more for next semester, but as of right now, if I don’t get more help, I’ll have to leave next year and go somewhere cheaper, near home.”

Tracy Fitzsimmons, Shenandoah’s president, said she began hearing about students’ financial anxieties in mid-September.

“They’d tell me they were thinking they might have to move off campus next semester and stay three to a bedroom, or give up the meal plan and just eat one meal a day,” Ms. Fitzsimmons said.

Shenandoah has started an emergency grant fund for students, increased its loan program and prepared to stretch out spring tuition payments for hard-pressed families.

Economic uncertainty touches every facet of higher education.

“We are planning to begin a capital campaign of $150-185 million,” said Karen R. Lawrence, president of Sarah Lawrence College. “We will still do that. We’re not compromising our ambitions, but the timing will be a little bit deferred.”

At the wealthiest institutions, endowment revenue usually covers about a third of operating costs, and most colleges and universities spend a percentage of their endowment, based on its average value over the previous three years, helping to smooth out economic ups and downs.

In recent years, with tuition rising faster than inflation, college affordability has become a significant issue. And with the sharp growth of endowments in recent years — Harvard’s hit $36.9 billion this summer — some politicians, notably Senator Charles E. Grassley, Republican of Iowa, have pushed for a requirement that colleges spend 5 percent of their endowments. Many of the wealthiest institutions responded by expanding financial aid last year, with dozens of them replacing loans with grants.

This fall, more universities are taking steps to increase affordability. Benedictine University, a Roman Catholic institution in Illinois, is freezing tuition; Vanderbilt University will replace loans with grants; Boston University has expanded scholarships for students who graduated from Boston public schools; and the University of Toledo announced free tuition for needy, high-performing graduates of Ohio’s six largest public school systems.

Presidents of many expensive private colleges are wondering how much more tuition pressure families can bear.

“I wouldn’t deny that a tuition freeze has occurred to me, but we can’t afford heroic gestures,” said Sandy Ungar, president of Goucher College in Baltimore.

Given the current climate, some say, colleges need to re-examine all of their economic assumptions.

“Several years ago, we started thinking about sustainability in environmental terms,” said Dick Celeste, the president of Colorado College. “Now we need to be thinking about sustainability in economic terms.”

Tough Sledding Ahead,Surviving A Coming USD Collapse

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By Christopher Laird

Now that the US election is over, we get to think about the Future. And, no matter how you look at it, the entire world, the West particularly, is in for tough sledding financially.

First, we will continue to battle an emerging economic slowdown. Then, later, we will be battling world currency instability – we already have signs of this now.

Even though gold and commodities have taken a big hit because of a general liquidation in everything, there is one thing none of us should lose sight of, and that is what happens when the USD finally lets go.

Why the USD is presently rallying

Just because the USD happens to be rallying now (with weekly fluctuations) does not mean that its fate is not bleak. There are many reasons the USD is rallying right now. They include flight to cash in general during market liquidations in all areas, but also cash hoarding because businesses cannot roll over the short term credit they use to do payrolls and ongoing operations. Then we have the usual end of year cash surge for businesses and financial institutions. Then of course there is flight to the USD for safety, and then finally, other countries currencies are adjusting to the slowing world economy, and the once hot foreign markets are cooling and there is lots of money moving out of the ‘emerging’ markets.

But, we are going to be facing two particular problems in 09 that none of us is really used to, that we really have never seen. The world is going to have a severe recession bordering on an economic depression. Essentially no one alive today knows what that is like. Only the oldest of us have lived through that experience.

But then, on top of that, at some point later the USD will finally collapse. This is not something way way out there in the future. This issue is becoming a near term threat.

What has held the USD up and why that’s going to change

The primary reason the USD has held up so well in the last decades, in spite of ever worsening US trade and budget deficits that add to over $1 trillion a year combined, is that the US was an export economy’s dream customer. Because the US was such a good customer to the world, they bought our US Treasury bonds, and lent trillions in other ways to the US consumer. As long as the US consumer could carry that process out, our trade partners could make bank on the US and USD.

However, once the US consumer is tapped out, and cannot effectively make a return on investment of our trade partners, the rationale for the continuation of the USD goes away. All that remains after that is a budget busted US Federal government. At that point, why would our trade partners continue to buy all the US treasury bonds and such, and debase their currencies, if the US cannot be such a good customer anymore? At that point, the USD will rapidly fall into a devaluation crisis.

None of us in the US has ever dealt with the twin threats coming our way in the next few years. The first is a real economic depression. The second will be the demise of the US dollar, or at the very least, its severe devaluation like 70% or more (at first).

I would like to point out that in the last great depression in the US in the 1930’s, we did not have a combination of a currency crisis with the economic crisis. The USD, although it fell compared to gold, held up well. Deflation increased the value of anything called cash, including gold.

This time, the outcome will be different. This time, the US faces an economic depression AND a currency crisis soon after. How far off is this?

Well, first, we are already well into the beginning of the economic depression. The damage done to the world credit and financial markets has been stunning since August 07. Over $35 trillion of value has been lost in the world financial markets. That has spilled over into the real economy now, and we will start to see bigger and bigger layoff notices. Economic demand will decline and we won’t see any mere one year recession, like all the pundits say ‘we foresee 5 quarters of economic decline in the US…’

This time we are talking on the scale of 5 years of economic decline and unemployment getting over 20%. The Great Depression lasted ten years, and the US had well over 25% unemployment. US economic production was halved!

The China situation

The rest of the world fared worse. And, we hear that China has this great economic growth, still on the order of 8% a year, a number any nation would kill for. But, China needs to ADD 15 million jobs a year merely to keep up with population growth, having 1.3 billion people!

So, this 8% growth in China is mandatory, not merely a luxury since China still has 800 million peasants in the rural areas all clamoring to move to the cities for better pay. Even at the lowest levels, Chinese city pay is three times the basic rural income which is starvation wages.

And then consider that there are 130 million undocumented Chinese who flocked to the cities for work (not residents of the city) who have nowhere to go now that their export dependent economy is slowing rapidly. The recipe here is for a revolution in China if they cannot keep 800 plus million people working… and this is just beginning to happen. And this issue is widely known to scare the hell out of the Chinese government.

But, to avoid a revolution, they MUST have 8% economic growth indefinitely? That is not going to happen. The party is about over in China.

The point here of emphasizing China’s demographics is that, without big exports to the West, they cannot sustain stability economically or politically. They are the poster child to what happens when the export economies slow drastically when the US export markets slow significantly.

Not going to stop economic contraction this time

But, getting back to the issue of economic depression and the USD. The whole point here is that the world economic engine is grinding to a halt and there is no way to stop it. The US Fed and other central banks have found out they cannot reflate the world economies this time, like they did after 2001 and 911 and the Tech bubble. This time reflation efforts are failing. Things are slowing down too fast this time, and that is combined with the imploding credit markets in every nation of the world.

Without credit, the world economies contract badly. Everything is credit based. Businesses need it to merely do daily operations, and people need it for purchases. The only other way is to have cash and pay as you go. The world economy is not structured to operate that way (things don’t have to be credit based but our world economy is inextricably addicted to it, and credit collapse equates to a world economic depression if the credit does not come back right soon).

And the credit is NOT coming back. Sure, we hear that Libor rates (interbank borrowing rates that is the lifeblood of financial institutions for short term funding needs) have improved. But, these lenders are not lending it out, they are merely covering their own needs and hoarding cash, just like businesses are being forced to since the short term credit markets are still frozen, and there is little chance of that improving for a good while.

So what does all this mean for the USD?

Now, what all this means for the USD is that, as the world loses its economic engine and goes into an economic depression, the highly abused USD will lose its reason to stay strong.

At some point all the US trade partners of the world will find the US is abusing the currency too much. With all the bailouts now, that starts to become more certain. Then, as an economic depression makes its way, the US fiscal deficits, which are already $1 trillion a year, will cause flight from the USD. At some point, our trade partners will simply stop buying the US Treasury notes/bills. This is going to happen, friends.

Then, the USD goes to hell fast. Now when is this? Well, a few years ago I wrote several articles which stated that, when the US consumer reached a point of not being able to give our trade partners a return on their massive subsidies to the US government and buy our bonds, then the USD game is over.

The only reason the USD has managed to avoid a huge devaluation, and even a currency crisis, is because since 1945 after WW2 ended, every time the US economy contracted the US was able to grow out of it. Or, in many cases the US was able to lower interest rates (meaning borrow out of it) and stimulate the economy.

Now, that stimulation process is broken, to say the least. Lower interest rates are not working this time. This time, we are not going to stimulate out of an economic depression. This time we get a depression. Why?

Because, we have two irresolvable problems to avoid a depression this time. This time, we are in the same situation generally as what happened in 1929, and then the ensuing world deflation.

The Two insoluble problems that will lead to a depression and ultimately the final USD collapse

• Deleveraging cannot be stopped, there is too much
  
• The USD is only supported by a healthy world economy and is subsidized

The world is deleveraging in totality and we have a breaking world finance bubble. I estimate that way over $1000 trillion of world financial markets alone are deleveraging. That number is calculated by adding up all the leverage out there, and the biggest one is the derivatives of all types that are really only big HUGE leveraged bets. They are nothing more than that. The BIS states that world derivatives alone are over $1 quadrillion worth – that’s 1000 trillion.

Even if central banks move heaven and earth with their now $7 trillion of infusions to every market imaginable now, that’s a drop in the bucket compared to what’s out there. So, the deleveraging will continue relentlessly this time.

Why did that happen? Quite simply, the Western consumers got tapped out. They borrowed more than they can sustain a return on. So, for example, we see the housing bubble collapse and then all the mortgage bonds collapse, and then all the banks collapse – get the idea? Then all the credit disappears everywhere and we get an assured economic depression. And that will lead to 20% unemployment or worse in the entire world – mark my words.

The overall picture is that the world economic/credit bubble since 1945 has just burst before our eyes since August 07. That is one huge bubble.

And, as they say, for every Ying there is a corresponding Yang, or more simply, what goes up must come down. And it’s coming down hard. And… we haven’t seen nothing yet either. The down has a long way to go; we are merely in the first stages. And, boy is the world already suffering.

So then, follow along here, the next victim of this emerging depression will be the USD. As I said, the only thing keeping the USD afloat with the massive fiscal deficits has been an ever spending US consumer who bought trillions of dollars worth of exports. When they get tapped out there is no reason for our trade partners to keep that up is there? The USD subsidies (primarily our trade partners buying US bonds of all types) will end this time around (this economic cycle).

How can we get out of this mess?

Well, first I have to say I don’t think we will avoid a long, possibly ten years, depression. But there are some ways it might be avoided.

First, if the US abrogated the $60 trillion of promises to Social Security and Medicare, maybe that would save the USD. But that won’t happen. Probably, what the US will do is just pay it all, but with worthless dollars.

The second thing that might get the world out of this impending economic depression and a collapse of the USD later would be to forgive all debts. Possibly that would wipe out the USD too anyway. But that would set the stage for a huge world economic recovery.

The trouble with debt forgiveness is it never seems to happen. Believe me, I am not talking hogwash about debt forgiveness. The Bible, for example, talks about how every 7 years and every 70 years there is to be total debt forgiveness. It’s called the Jubilee. The idea is a legitimate concept that can work and has worked.

You don’t think that’s viable? Well it can work because all that happens is that the lenders who offer credit have to factor in either payment in full or forgiveness over a 7 year period. This can be done and would actually result in the biggest sustained world economic boom ever imagined.

The thing that causes world economic depressions are debt and financial bubbles. The two go together.

But, getting back to the fate of the USD. The problem is, the lenders won’t forgive debt or make it amortize in a short time. They insist on ever bigger debts. They do things like making the bankruptcy laws far more stringent (recently done in the US). And thus, they guarantee that the world consumers ultimately will get tapped out (just a matter of time) and then a world bubble collapse and economic depression.

The interesting thing that happens is that there is ultimately dept repudiation in depressions anyway. Which leads us to the USD’s fate in coming years.

I don’t think we will have to wait for 30 years to see Social Security and Medicare to bankrupt the US. What will happen sooner is that, as the US enters economic depression this time, the return on investment for our trade partners will disappear. The US won’t keep our trade parnters’ hundreds of millions employed, and they will then stop buying US Treasury bonds. And then the USD devalues 70% in a year. Maybe going to zero soon after that. The US is then bankrupted.

When can this happen? Possibly mid way into the next US economic depression (not recession). And, since I think we are now entering the beginning of a US depression, then if it lasts ten years, that means we have about 4 years to go for the USD to finally give up the ghost.

Yes, I mean that. We have maybe 4 years left, maybe even only 2 years for the USD to remain anything at all.

What can you do about all this?

Well, aside from dealing with the certain political and social chaos and those dangers when the USD collapses, you need to move your money into a combination of other currencies and also into paid off real things. It’s conceivable that some stocks in real things like mines would do well too. But stocks and financial products in general, like annuities, will be destroyed in value because, in an economic depression, companies either go out of business or shrink.

And in a currency crisis (USD) that Social Security check, that bank CD, that Treasury bond, that insurance annuity becomes worthless. Sorry, but that is the reality.

So, to escape losing all your income and losing all your wealth in a currency crisis, you have to have money in other currencies, and also in paid off real things that are still there after the currency is destroyed. Obviously, gold and precious metals figure in here. The falling prices right now are quite beside the point. What really matters is what happens in the next 4 or so years to the USD. That’s the BIG issue.

The reason why gold and such are dropping now is because of the general financial and commodity deleveraging. When that bottoms, then gold will still be there. The only thing is, when this world deleveraging bottoms, I don’t think much else will still be there. The problem is how to survive it.

Anyway, we have ongoing discussions of these topics at our PrudentSquirrel newsletter. Since our beginning in 2005, we have grown constantly and now have more active paying subscribers than ever. We also have an enviable renewal rate.

The Prudent Squirrel newsletter is our financial and gold commentary. Subscribers get 44 newsletters a year on Sundays, and also mid week email alerts as needed. We alerted our subscribers April 20 that the USD was bottoming. The USD has strengthened significantly since. The alerts include quick notification of important financial news developments by email. Subscribers tell us that the alerts alone are worth subscribing for.

I had one potential subscriber ask me if the newsletter has much more content than these public articles, ie, if it was worth subscribing. The answer is that the public articles have less than 10% of our research and conclusions that subscribers see, not to mention the subscriber email alerts of important breaking financial news. We have anticipated many significant market moves in the last year, such as imminent drops in world stock markets within days of them happening, and big swings in the gold markets within days of them occurring. We have also made a number of good calls on big currency swings, such as with the USD, the Euro and the Yen.

Obama advisers discuss preparations for war on Iran

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By Peter Symonds

On the eve of the US elections, the New York Times cautiously pointed on Monday to the emergence of a bipartisan consensus in Washington for an aggressive new strategy towards Iran. While virtually nothing was said in the course of the election campaign, behind-the-scenes top advisers from the Obama and McCain camps have been discussing the rapid escalation of diplomatic pressure and punitive sanctions against Iran, backed by preparations for military strikes.

The article entitled “New Beltway Debate: What to do about Iran” noted with a degree of alarm: “It is a frightening notion, but it not just the trigger-happy Bush administration discussing—if only theoretically—the possibility of military action to stop Iran’s nuclear weapons program… [R]easonable people from both parties are examining the so-called military option, along with new diplomatic initiatives.”

Behind the backs of American voters, top advisers for President-elect Barack Obama have been setting the stage for a dramatic escalation of confrontation with Iran as soon as the new administration takes office. A report released in September from the Bipartisan Policy Center, a Washington-based think tank, argued that a nuclear weapons capable Iran was “strategically untenable” and detailed a robust approach, “incorporating new diplomatic, economic and military tools in an integrated fashion”.

A key member of the Center’s task force was Obama’s top Middle East adviser, Dennis Ross, who is well known for his hawkish views. He backed the US invasion of Iraq and is closely associated with neo-cons such as Paul Wolfowitz. Ross worked under Wolfowitz in the Carter and Reagan administrations before becoming the chief Middle East envoy under presidents Bush senior and Clinton. After leaving the State Department in 2000, he joined the right-wing, pro-Israel think tank—the Washington Institute for Near East Policy—and signed up as a foreign policy analyst for Fox News.

The Bipartisan Policy Center report insisted that time was short, declaring: “Tehran’s progress means that the next administration might have little time and fewer options to deal with this threat.” It rejected out-of-hand both Tehran’s claims that its nuclear programs were for peaceful purposes, and the 2007 National Intelligence Estimate by US intelligence agencies which found that Iran had ended any nuclear weapons program in 2003.

The report was critical of the Bush administration’s failure to stop Iran’s nuclear programs, but its strategy is essentially the same—limited inducements backed by harsher economic sanctions and the threat of war. Its plan for consolidating international support is likewise premised on preemptive military action against Iran. Russia, China and the European powers are all to be warned that their failure to accede to tough sanctions, including a provocative blockade on Iranian oil exports, will only increase the likelihood of war.

To underscore these warnings, the report proposed that the US would need to immediately boost its military presence in the Persian Gulf. “This should commence the first day the new president enters office, especially as the Islamic Republic and its proxies might seek to test the new administration. It would involve pre-positioning US and allied forces, deploying additional aircraft carrier battle groups and minesweepers, [and] emplacing other war materiel in the region,” it stated.

In language that closely parallels Bush’s insistence that “all options remain on the table”, the report declared: “We believe a military strike is a feasible option and must remain a last resort to retard Iran’s nuclear program.” Such a military strike “would have to target not only Iran’s nuclear infrastructure, but also its conventional military infrastructure in order to suppress an Iranian response.”

Significantly, the report was drafted by Michael Rubin, from the neo-conservative American Enterprise Institute, which was heavily involved in promoting the 2003 invasion of Iraq. A number of Obama’s senior Democratic advisers “unanimously approved” the document, including Dennis Ross, former senator Charles Robb, who co-chaired the task force, and Ashton Carter, who served as assistant secretary for defense under Clinton.

Carter and Ross also participated in writing a report for the bipartisan Center for a New American Security, published in September, which concluded that military action against Iran had to be “an element of any true option”. While Ross examined the diplomatic options in detail, Carter laid out the “military elements” that had to underpin them, including a cost/benefit analysis of a US aerial bombardment of Iran.

Other senior Obama foreign policy and defense advisers have been closely involved in these discussions. A statement entitled, “Strengthening the Partnership: How to deepen US-Israel cooperation on the Iranian nuclear challenge”, drafted in June by a Washington Institute for Near East Policy task force, recommended the next administration hold discussions with Israel over “the entire range of policy options”, including “preventative military action”. Ross was a taskforce co-convener, and top Obama advisers Anthony Lake, Susan Rice and Richard Clarke all put their names to the document.

As the New York Times noted on Monday, Obama defense adviser Richard Danzig, former navy secretary under Clinton, attended a conference on the Middle East convened in September by the same pro-Israel think tank. He told the audience that his candidate believed that a military attack on Iran was a “terrible” choice, but “it may be that in some terrible world we will have to come to grips with such a terrible choice”. Richard Clarke, who was also present, declared that Obama was of the view that “Tehran’s growing influence must be curbed and that Iran’s acquisition of a nuclear weapon is unacceptable.” While “his first inclination is not to pull the trigger,” Clarke stated, “if circumstances required the use of military force, Obama would not hesitate.”

While the New York Times article was muted and did not examine the reports too deeply, writer Carol Giacomo was clearly concerned at the parallels with the US invasion of Iraq. After pointing out that “the American public is largely unaware of this discussion,” she declared: “What makes me nervous is that’s what happened in the run-up to the Iraq war.”

Giacomo continued: “Bush administration officials drove the discussion, but the cognoscenti were complicit. The question was asked and answered in policy circles before most Americans know what was happening… As a diplomatic correspondent for Reuters in those days, I feel some responsibility for not doing more to ensure that the calamitous decision to invade Iraq was more skeptically vetted.”

The emerging consensus on Iran in US foreign policy circles again underscores the fact that the differences between Obama and McCain were purely tactical. While millions of Americans voted for the Democratic candidate believing he would end the war in Iraq and address their pressing economic needs, powerful sections of the American elite swung behind him as a better vehicle to prosecute US economic and strategic interests in the Middle East and Central Asia—including the use of military force against Iran.

Obama's Toughest Challenge

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By Michael T. Klare

America's Energy Crunch Comes Home

Of all the challenges facing President Barack Obama next January, none is likely to prove as daunting, or important to the future of this nation, as that of energy. After all, energy policy -- so totally mishandled by the outgoing Bush-Cheney administration -- figures in each of the other major challenges facing the new president, including the economy, the environment, foreign policy, and our Middle Eastern wars. Most of all, it will prove a monumental challenge because the United States faces an energy crisis of unprecedented magnitude that is getting worse by the day.

The U.S. needs energy -- lots of it. Day in and day out, this country, with only 5% of the world’s population, consumes one quarter of the world’s total energy supply. About 40% of our energy comes from oil: some 20 million barrels, or 840 million gallons a day. Another 23% comes from coal, and a like percentage from natural gas. Providing all this energy to American consumers and businesses, even in an economic downturn, remains a Herculean task, and will only grow more so in the years ahead. Addressing the environmental consequences of consuming fossil fuels at such levels, all emitting climate-altering greenhouse gases, only makes this equation more intimidating.

As President Obama faces our energy problem, he will have to address three overarching challenges:

1. The United States relies excessively on oil to supply its energy needs at a time when the future availability of petroleum is increasingly in question.

2. Our most abundant domestic source of fuel, coal, is the greatest emitter of greenhouse gases when consumed in the current manner.

3. No other source of energy, including natural gas, nuclear power, biofuels, wind power, and solar power is currently capable of supplanting our oil and coal consumption, even if a decision is made to reduce their importance in our energy mix.

This, then, is the essence of Obama’s energy dilemma. Let’s take a closer look at each of its key components.

Excessive Reliance on Oil

No other major power relies on getting so much of its energy from oil. Making that 40% figure especially daunting is this: the world supply of oil is about to contract. The competition for remaining supplies will then intensify, while most of what remains is located in inherently unstable regions, threatening to lead the U.S. into unceasing oil wars.

Just how much of the world’s untapped oil supply remains to be exploited, and how quickly we will reach a peak of sustainable daily world oil output, are matters of some contention, but recently the scope of debate on this question has narrowed appreciably.

Most energy experts now believe that we have consumed approximately half of the planet’s original petroleum inheritance and are very close to a peak in production. No one knows whether it will arrive in 2010, 2012, 2015, or beyond, but it is certainly near. In addition, most energy professionals now believe that global oil output will peak at far lower levels than only recently imagined -- perhaps 90-95 million barrels per day, not the 115-125 million barrels once projected by the U.S. Department of Energy. (Here I’m speaking only of conventional, liquid petroleum; there are some "unconventional" sources of oil -- Canadian tar sands, Venezuelan extra-heavy crude, and the like -- that may boost these numbers by a few millions of barrels per day, without altering the global energy equation significantly.)

What underlies these more pessimistic assumptions? To begin with, the depletion rate of existing fields is accelerating. Most of the giant fields on which the world now relies for the bulk of its oil supplies were discovered 30 to 60 years ago and are now reaching the end of their productive life cycles.

It used to be thought that the depletion rate of these fields was about 4% to 5% a year, but in a study to be released November 12, the International Energy Agency (IEA), an affiliate of the Organization for Economic Cooperation and Development (the club of wealthy industrialized nations), is expected to report that the decline rate is closer to 9%, an astonishingly high figure. At this rate of decline, the world’s major fields will be depleted of their remaining supplies of oil relatively quickly, leaving us dependent on a constellation of smaller, less productive fields, often located in difficult to reach or unstable areas, as well as whatever new deposits the oil industry is able to locate and develop.

And this is the second big problem: Despite huge increases in the funds devoted to exploration, the oil companies are not finding giant new fields comparable to the "elephants" discovered in previous decades. Only two such fields were discovered between 1970 and 1990, and only one since -- the Kashagan field in Kazakhstan’s corner of the Caspian Sea. True, the companies have discovered some large fields in the deep waters of the Gulf of Mexico and off the coasts of Angola and Brazil, but these are neither on a par with the largest fields now in production, nor anywhere near as easy to bring on line. They will not be able to reverse the coming decline in global output.

Given these factors, it is clear that the global supply of oil is destined to begin contracting in the not-too-distant future, and that the global peak in production -- when it does arrive -- will be at a level much lower than previously assumed. The current global economic downturn and the sudden fall in energy prices may, for a while, mask this phenomenon, but they won’t change it in any significant way.

Our excessive reliance on oil in good times and bad is made all the more problematic by the fact that, just as supplies are dwindling, global demand is expected to rise mainly because of increased consumption in China, India, and other developing nations.

As recently as 1990, the developing nations of Asia accounted for only a relatively small 10% of global oil consumption. Their economic growth has been so rapid, however, and their need for oil so voracious that they now consume about 18% of the world’s supply. If current trends persist, that will rise to 27% in 2030, exceeding North American net consumption for the first time. This means -- if energy habits and present energy use don’t change radically -- that Americans will be competing with Chinese and Indian consumers for every barrel of spare oil available on world markets, driving up prices and jeopardizing the health of our petroleum-dependent economy.

To make matters worse, more and more of the world’s remaining oil production will be concentrated in the Middle East, Central Asia, and sub-Saharan Africa. That these areas are chronically unstable is hardly accidental: many bear the scars of colonialism or are delineated by borders drawn up by the colonial powers that bear no resemblance to often fractious ethnic realities on the ground. Many also suffer from the "resource curse": the concentration of power in the hands of venal elites that seek to monopolize the collection of oil revenues by denying rights to the rest of the population, thereby inviting revolts, coups, and energy sabotage of every sort.

As it has grown more reliant on oil deliveries from these areas, the United States has attempted to enhance its energy "security" by an increasing reliance on military force, even though such efforts have largely proved ineffectual. Despite all the money and effort devoted to enforcement of what was once known as the Carter Doctrine -- which stated that the uninterrupted flow of Persian Gulf oil to the United States is a vital national interest to be protected by any means necessary, including military force -- the Persian Gulf is no more stable or peaceful today than it was in 1980, when President Jimmy Carter issued his famous decree.

Our over-reliance on oil, then, is our greatest energy vulnerability. But what are the alternatives?

The Problem with Coal

The energy source which the United States possesses in greatest abundance is coal. This country has the world’s largest reserves, 247 billion metric tons, and is second only to China in using coal. In this country, coal is primarily employed to produce electricity, but it can also be converted into a diesel fuel -- known as coal-to-liquids or CTL -- to power cars and trucks. Although CTL, widely used by Germany during World War II to power its war machine, is still in its infancy in the U.S., it could conceivably be used to supplement future declining gas supplies.

When coal is burned in the conventional manner, however, it emits more climate-altering greenhouse gases than any other fossil fuel -- twice as much as natural gas and one-and-a-half times that of oil to produce the same amount of energy. As a result, any increase in our reliance on coal will lead to ever greater emissions of carbon dioxide, only accelerating the already perilous rate of global warming.

In addition, an increased U.S. reliance on coal would only flash a green light to China, India, and other countries eager to do likewise. The bottom line? Any hope of reversing the buildup of greenhouse gases in the atmosphere in time to avert the most severe consequences of climate change would go out the window (possibly quite literally).

During the recent election campaign, Barack Obama and John McCain both spoke of speeding the development of "clean coal technology." In the present context, however, clean coal is a deceptive term, if not an outright misnomer. It generally refers to pollution-free coal, not to coal free of carbon emissions. Coal that would burn without damaging the climate is best referred to as climate-friendly coal, or "safe coal." At present, there are no power plants anywhere on the planet capable of burning coal in a climate-safe manner.

Right now, there is only one technology being seriously discussed that would burn coal safely: carbon capture and storage, or carbon sequestration. Under this process, powdered coal is combined with steam and turned into a gas; then the carbon is stripped away and eventually buried. This is a tricky and costly technique that has yet to be fully tested. But at the moment, it is the only foreseeable path to using coal in a climate-friendly way. President-elect Obama has spoken of his interest in this technology, but without a lot more support and investment -- no small matter in economically tough times -- it will never get the boost it deserves.

Consider the Alternatives

So what’s left to satisfy our future energy needs?

Natural gas is the next biggest source and it possesses a number of advantages. Of all the fossil fuels, it releases the least amount of carbon dioxide when burned. We possess substantial, if not overwhelming, reserves of natural gas in this country. But like oil, it is a finite substance. Eventually, it, too, will peak and begin a decline of its own. Energy experts are less certain about when exactly this is likely to occur, but most see it coming a decade or so after oil’s peak.

Our biggest problem with natural gas is that we are gradually running out of North American reserves and so must increasingly rely on supplies from elsewhere -- in this case, in the form of liquefied natural gas, or LNG. Fully 45% of the world’s remaining reserves are, however, held by just three countries, Russia, Iran, and Qatar, while large amounts are also held by Algeria, Iraq, Kazakhstan, Saudi Arabia, Turkmenistan, and Venezuela. This means, of course, that we face the same geopolitical problems relying on natural gas as we do with oil.

Some say we should increase our reliance on nuclear power. Nuclear power’s attraction is that, once in operation, it does not emit carbon dioxide. It does, however, raise enormous safety issues and produces toxic radioactive wastes that must be stored for thousands, or even tens of thousands, of years in ultra-safe containers -- a technological challenge that has yet to be overcome. Given these problems, the rising costs and legal problems of building new reactors have deterred all but a few utilities from considering their construction, putting distinct limits on nuclear power’s capacity to overcome America’s energy crisis.

By far the most attractive alternative to oil and coal is obviously renewable energy, especially wind and solar power -- much praised but inadequately supported by politicians of both parties. These need no fuel source (save the sun and wind), are never used up, and emit no carbon dioxide. They seem the perfect solution to the planet’s energy and climate crises.

The full potential of wind and solar power, however, cannot be realized until at least two other hurdles are overcome: the development of efficient storage systems to collect energy when the sun and wind are strong and release it when they are not, and the construction of an expanded nationwide electrical grid to connect areas of reliable wind (especially the mountain states and high plains) and sunshine (the Southwest) with the areas of greatest need. These are bound to be costly endeavors, but until they are fully funded, wind and solar power will not be capable of replacing more than a tiny fraction of oil and coal in the nation’s overall energy mix. Unfortunately, against a backdrop of bad times in a new era of "cheap" oil that will not last, the likelihood of such funding at the levels needed has declined precipitously.

Much can be said about the potential of advanced biofuels (those not reliant on food crops like corn), geothermal energy, wave power, hydrogen power, and nuclear fusion, but these all remain in the same category as wind and solar (only more so): they show a lot of potential, but without substantially more research, development, and investment, they cannot help wean us from our reliance on oil and coal.

The Challenge to be Met

If this assessment is accurate, President Obama will face a tough, if not overwhelming, challenge in attempting to get the nation’s long-term energy crisis in hand. On coming into office in increasingly tough times, he will be besieged by a host of immediate crises and demands for funds. On energy, his natural inclination, given limited financial resources, will undoubtedly be to make a series of modest gestures toward "green energy independence." This coming crisis, the central one of our lifetimes and those of our children and grandchildren, cannot, unfortunately, be solved via small-scale course corrections.

Needed is a major White House-led initiative on the scale of the World War II Manhattan Project that produced the first atomic bomb or the Apollo Moon Project. The principal goals of such an epic undertaking would have to include:

1. Reducing oil’s contribution to America’s total energy supply by half over the next quarter century. This would require a comprehensive program of conservation, increased development of public transport, the accelerated development of electric-powered vehicles and advanced biofuels, and other technological innovations.

2. Gradually reducing U.S. reliance on coal, unless consumed in a climate-friendly manner, as well as providing government support for the development of carbon capture and storage technology.

3. Increasing the contribution of renewable energy sources to America’s total energy mix from their current 6% to at least 25%, if not significantly more, by 2030. This would require substantial public investment in new technologies and electrical power lines.

4. Demilitarizing America’s reliance on imported petroleum. This means repudiating the Carter Doctrine, dismantling the vast military apparatus created since 1980 to enforce that policy, and using the resulting savings -- as much as $150 billion per year, says a new report from the National Priorities Project -- to help finance the initiatives described above.

Only by embracing such goals can President Obama hope to overcome the long-term, potentially devastating energy crisis now facing this nation.

Obama's Historic Victory

Go to Original
By Howard Zinn

Those of us on the Left who have criticized Obama, as I have, for his failure to take bold positions on the war and on the economy, must join the exultation of those Americans, black and white, who shouted and wept Tuesday night as they were informed that Barack Obama had won the presidential election. It is truly a historic moment, that a black man will lead our country. The enthusiasm of the young, black and white, the hopes of their elders, cannot simply be ignored.

There was a similar moment a century and a half ago, in the year 1860, when Abraham Lincoln was elected president. Lincoln had been criticized harshly by the abolitionists, the anti-slavery movement, for his failure to take a clear, bold stand against slavery, for acting as a shrewd politician rather than a moral force. But when he was elected, the abolitionist leader Wendell Phillips, who had been an angry critic of Lincoln’s cautiousness, recognized the possibility in his election.

Phillips wrote that for the first time in the nation’s history “the slave has chosen a President of the United States.” Lincoln, he said, was not an abolitionist, but he in some way “consents to represent an antislavery position.” Like a pawn on the chessboard, Lincoln had the potential, if the American people acted vigorously, to be moved across the board, converted into a queen, and, as Phillips said, “sweep the board.”

Obama, like Lincoln, tends to look first at his political fortunes instead of making his decisions on moral grounds. But, as the first African American in the White House, elected by an enthusiastic citizenry which expects a decisive move towards peace and social justice, he presents a possibility for important change.

Obama becomes president in a situation which cries out for such change. The nation has been engaged in two futile and immoral wars, in Iraq and Afghanistan, and the American people have turned decisively against those wars. The economy is shaken by tremendous blows, and is in danger of collapsing, as families lose their homes and working people, including those in the middle class, lose their jobs, So the population is ready for change, indeed, desperate for change, and “change” was the word most used by Obama in his campaign.

What kind of change is needed? First, to announce the withdrawal of our troops from Iraq and Afghanistan, and to renounce the Bush doctrine of preventive war as well as the Carter doctrine of military action to control Mideast oil. He needs to radically change the direction of U.S. foreign policy, declare that the U.S. is a peace loving country which will not intervene militarily in other parts of the world, and start dismantling the military bases we have in over a hundred countries. Also he must begin meeting with Medvedev, the Russian leader, to reach agreement on the dismantling of the nuclear arsenals, in keeping with the Nuclear Anti-Proliferation Treaty.

This turn-around from militarism will free hundreds of billions of dollars. A tax program which will sharply increase taxes on the richest 1% of the nation, and will tax their wealth as well as their income, will yield more hundreds of billions of dollars.

With all that saved money, the government will be able to give free health care to everyone, put millions of people to work (which the so-called free market has not been able to do). In short, emulate the New Deal program, in which millions were given jobs by the government. This is just an outline of a program which could transform the United States and make it a good neighbor to the world.

Why Iraqis, Afghans, Palestinians, and Others Might Be Nervous About President Obama

Go to Original
By Amy Goodman and Juan Gonzalez

Juan Gonzalez: Congratulations are pouring in from around the world for President-elect Barack Obama after his historic victory Tuesday night. His diverse background is truly unique for a U.S. president. With a mother from Kansas, a father from Kenya, a stepfather from Indonesia, and a middle name -- Hussein -- from the Middle East, Obama has sparked the imagination of people on every continent. In cities across Africa, people hailed the United States for electing Obama.

Johnny Bent, Johannesburg Resident: I think Obama is a good guy. And I just hope Obama will have influence in Africa, especially to develop us, to help us with the sickness and the AIDS and so on. So, especially it’s -- at least he’s from Kenya. So I just hope there’s going to be a lot of influence in Africa to help us and support us and to come out as a new, new, new nation. Thank you.

Bolaji Ilori, Nigerian Politician: For us, this is a threshold of history. It is a resurgence of hope for black man, and not just for black man, a triumph of democracy. For us, it’s a lesson in this country. We are trying now -- we are struggling for open and democratic governance, for us to have flawless elections. We are happy we saw the loser congratulating the winner. For us, it’s good. But for us, Obama represents a new generation of ideas, of peace in the world.

Femi Oshi, Johannesburg Resident: It’s not only the president of the United States of America; this is a black man in a black skin, ruling the world. And take it or leave it, he’s going to be the best thing in the history of the Americans.

JG: In the Middle East, reactions to Obama’s victory were more cautious. From Iraq to Iran to the Occupied Territories, people called on Obama to change U.S. foreign policy toward the region.

Alaa Al-Zerjawi, Sadr City Resident: [translated] My message to the U.S. president, Barack Obama, is to withdraw troops from our country. This is the first thing. We want him to be honest with us, because Bush has given many promises, but he did not fulfill any of them. We have suffered a lot from the occupation. Because of the occupation, there were divisions, sectarian conflicts, and now we want them to leave our country.

Mohammed Abu Awda, Gaza Resident: [translated] We hope that he will help find a solution for the Palestinian cause and to end the siege, because we are really suffering. I hope we find a solution for the Palestinian cause, and everybody will live in peace.

Hossein Nazari, Iranian Student: My message to Obama, to Barack Obama, is that if you want your country -- actually, if you want to have a good relationship with our country, with our politicians and with our government, you have to radically change your former policies towards Iran.

JG: And in South Asia, in countries like Afghanistan and Pakistan, there was concern over the future of U.S. foreign policy under a President Obama. In Afghanistan, where Obama has pledged to escalate the war, President Hamid Karzai called for an end to U.S. air strikes in the country.

President Hamid Karzai: [translated] Our demand is a change in strategy fighting terrorism. It means fighting against terrorism should not be in Afghanistan rural areas. Fighting against terrorism is not in our country. Our country is a victim of terrorism. And I wish that civilian casualties would be eliminated here. By bombing Afghanistan, the war against terrorism cannot be won. These are the important demands of Afghans. This is our first demand and our basic demand.

Arshad Hussain, Pakistani Journalist: [translated] Pakistan should not expect much, because every U.S. president has his own interest. The example is President Bush and many others who give aid to Pakistan but did not get much work done in return.

Amy Goodman:Today, we host a discussion on Obama’s foreign policy, particularly with respect to hotspots in the Middle East, in South Asia, Africa and Latin America. We’ll talk about the concerns and hopes of those who live in countries at the receiving end of American foreign policy.

We’re joined on the phone and through video stream in studios by a number of people. First, Australian investigative journalist, bestselling author, documentary filmmaker, John Pilger, joins us on the telephone from Britain, just back from the United States. His latest book is called Freedom Next Time: Resisting the Empire; his most recent film, The War on Democracy.

And we’re joined in our firehouse studio by Mahmood Mamdani. He is professor of government and anthropology at Columbia University and has written extensively on post-colonial African politics. His most recent book is Good Muslim, Bad Muslim: America, the Cold War and the Roots of Terror. His latest article for The Nation magazine focuses on recent events in Darfur and is called "The New Humanitarian Order."

We’ll start with John Pilger in Britain. You were just in the United States in Houston. You’re back in London right now. Your response to the election of Barack Hussein Obama as president of the United States?

John Pilger: Well, my response, Amy, is that really anyone was better than Bush and the Bush administration. Having experienced election night in the United States and then seeing the response here, I feel that it’s time that analysis and critical thinking took over and that those of us who wish to think that way, who wish to think critically, really should start addressing the -- this rather manipulated emotional response. I don’t, in any way, cast doubt on the sincerity of the way people are speaking about the election of Obama around the world, although I think the reaction that you just played from the Middle East is rather more near the realism that is close to truth. But I do think we have to consider President-elect Obama as a man of the system.

Michael Moore had it right when he said the other day, let’s hope that Obama breaks all his election promises, as politicians generally do, because all his election promises, in terms of foreign policy, are a continuation of business as usual. And even if there is a return to what used to be called a multilateral world, I think there has to be critical analysis of the return to the pretensions of America as a peacemaker around the world. We had to endure this, and I mean endure it during the Clinton years, and I don’t think that we, in the rest of the world, ought to have to endure it now through the Obama years, so that we have a continuation, if you like, of liberalism as a divisive, almost war-making ideology, being used to destroy liberalism as a reality, because that has gone on under so-called liberal presidents, from Kennedy to Clinton, Democratic presidents. And President-elect Obama suggests to us, in his promises, that he is going to continue that, bombing Pakistan and Afghanistan.

Someone said to me -- in fact, I was talking to my daughter when I got off the plane from Houston this morning, and she said, "What was it like over there?" And we were discussing it, and I said, "Well, it comes down to, I suppose, asking an Afghan child how they feel when their family has been destroyed by a 500-pound bunker-busting bomb dropped by the United States and dropped by President Obama, as he continues that war. I think that’s the reality that we really have to begin to discuss now, having celebrated, and rightly celebrated, the ascent of the first African American president of the United States.

JG: And, John Pilger, what sign would you look for in these early days now, as Obama begins to move into a transition period, that would indicate to you that he would be trying to break, in one way or other, from this neoliberalism of the Clinton years?

JP: Well, it’s difficult to know. Breaking from the Bush years is going to be the first, and I suppose breaking from the Bush years means actually talking to people and negotiating. I think breaking from, let’s say, the Democratic years -- the Bush, yes -- the Clinton years will mean giving us a sign that the ideological, rapacious, war-making machine that has been built over many years and reinforced, as perhaps never before during the eight years of Bush, that that ideological machine does not transcend a loss of electoral power. You see, that’s really the central issue here, that a kind of ideological consensus has been built under Bush. Now, yes, Obama has been voted in, but will that vote, will that -- will a new president transcend this ideological machine?

You know, during the campaign, there was almost nothing between McCain and Obama in foreign policy. Indeed, Obama went further. I mean, he even declared Jerusalem the capital of Israel. He threatened Latin America. He, at times, seemed to be going further than Bush. And, of course, people, realists, the so-called realists, would shake their heads and say, "Well, yes, he has to do that."

Look, in answer to your question, I think he has to -- in order to show that he is in any way different -- he has to start dismantling this machine, for example, going against his promise to continue the embargo on Cuba, to drop that; to reach out to the governments of Venezuela and Bolivia and Ecuador, each of which is under attack, subversive attack by the United States; to face the reality that Afghanistan is a colonial war; and to not let the so-called withdrawal from Iraq be a sham, that it leaves these so-called enduring bases. That, any one of those, any change in one of those, would indicate that Obama is truly different.

…

AG: We’re turning now to Mahmood Mamdani, professor of government and anthropology at Columbia University. His most recent book, Good Muslim, Bad Muslim: America, the Cold War and the Roots of Terror. The latest piece in The Nation, "The New Humanitarian Order." Your response to the election of Barack Obama?

Mahmood Mamdani: Well, I think John Pilger has given a good account of the limits within which Obama will operate. And perhaps I should talk about the possibilities within those limits.

When the Cold War ended, the losing power in the Cold War, the Soviet Union, began a process of reform. The U.S. never did begin a process of reform. Instead, it embarked on a war on terror after 9/11, in order to build on the military machine inherited from the Cold War. And the war on terror, we know, has been mainly an advertising campaign, a lethal advertising campaign. So I agree with Pilger that Obama’s first task is going to be to cut through this ideological sham and to bring the American people to face realities.

The most that Obama can contribute, within the context of being the president of an imperial power, is to recognize the changing world situation, to recognize that this is the end of the era of a single superpower, that the U.S. will operate amongst several powers, that the U.S. has to learn to live in the world rather than simply to occupy it.

And I think there are several indications from the campaign -- I mean, the campaign was full of extreme and contradictory promises and provocations. But if you look on the side of the promises, there are indications that this is within the realm of the possible. There is the discussion of the need to speak to the president of Iran without any preconditions. There is that remarkable primary debate with Hillary and Edwards, where a reporter asked the three of them who would Martin Luther King support on this day, and Hillary and Edwards responded by convincing the audience why King would have supported them. And Obama responded by saying King would not have supported anybody, that King would have organized his movement to push the winning candidate to pursue the objectives. Well, that’s the real question now in the U.S. today.

There was a movement, a youth movement, to elect Obama. Will that movement dissolve itself? Will that movement build itself now around the objectives for which it organized? Will America recognize, as I believe South Africa has after the election of Mandela, that the election of Mandela was not change, but an opportunity to change? And whether that opportunity is realized and transformed into a program of social justice within the country and peace abroad will depend on the movement that pushes Obama and gives him the opportunity to respond to it.

JG: One of the big changes that surprised many people when Bush came into office was that he had opposed this whole idea of the United States getting involved in interventions for nation-building, and then he actually became a prime proponent of regime change around the world, basically following a lot of what the Clinton administration had tried to do, this humanitarian intervention, spreading democracy. Do you fear that there might be some directions of Obama in this direction? You’ve written about Darfur, this whole pressure for, quote, "humanitarian" intervention that actually becomes a new form of imperialism.

MM: Well, look, the lesson of Bush is that when a candidate steps from the arena of electoral politics to the presidency of the U.S., the kinds of interests and pressures that now come to bear on the candidate are different, larger. And the context within which the president now operates is different. There are anxieties about the particular kinds of people who gathered around Obama, especially as regards foreign policy and particularly as regards Africa. Some of the liberal humanitarian interventionists, the most vocal of them, what I call Democratic neocons, like Pendergast, for example, are huge Obama fans and are there around him.

AG: Let me play for you a quote of the person closest to him, and that’s Joe Biden, his vice president. Last month, in the presidential debate, Gwen Ifill asked Joe Biden about his reputation as an interventionist and his support for sending U.S. troops to Darfur.

Sen. Joe Biden: I don’t have a stomach for genocide when it comes to Darfur. We can now impose a no-fly zone; it’s within our capacity. We can lead NATO if we’re willing to take a hard stand. We can. I’ve been in those camps in Chad. I’ve seen the suffering. Thousands and tens of thousands of people have died and are dying. We should rally the world to act, and we should demonstrate it by our own movement to provide the helicopters to get those 21,000 forces of the African Union in there now to stop this genocide.

AG: That’s the Vice President-elect Joe Biden. Professor Mahmood Mamdani?

MM: Well, I read the verbatim account of the Senate Foreign Relations subcommittee on which Joe Biden sits, grilling Andrew Natsios, Bush’s representative to Sudan. And Andrew Natsios was basically saying there is no genocide in Darfur. And they forced him, literally, compelled him, to simply use that word, "genocide."

I think you’re right that this particular vice president is enamored with wanting to show U.S. power in a humanitarian way. And what’s worrying about it is, of course, that we know -- we know that mortalities in Darfur declined dramatically from early 2005. We know that the Save Darfur campaign and its figures on mortality -- 400,000 -- are simply not true; they do not reflect the reality at all. We know that the U.S., when it promised in 2006 to give $50 million for the African Union troops, did not give a single dollar. We know that there is a huge gulf between war talk and actual practice on the ground. I think this is one of the things Obama will have to confront, and one hopes that Biden, like other vice presidents, will simply be one small voice in the administration that’s coming.

AG: Let’s talk also about the first position that has been named, Rahm Emanuel. I want to also go to Ali Abunimah. He is joining us by video stream from Chicago, co-founder of the Electronic Intifada and author of One Country: A Bold Proposal to End the Israeli-Palestinian Impasse. Welcome to Democracy Now!, Ali Abunimah.

Ali Abunimah: Thank you. Good morning, Amy.

AG: Let’s go to that first news out of the new Obama administration. By the way, President-elect Obama, Joe Biden are getting their first top-secret intelligence briefing today by the Director of National Intelligence. But what about yesterday’s announcement that Rahm Israel Emanuel, the Chicago Congress member, very close to Barack Obama, has been offered the Chief of Staff position? You, too, are in Chicago.

AA: Well, I thought it was quite ironic, since a lot of racists have tried to make an issue out of Barack Obama’s middle name, Hussein, that the same kind of people might be happy with Rahm Israel Emanuel’s middle name. And indeed, Emanuel is one of the most hard-line supporters of Israel in the Congress and has been for many years. He’s the son of Benjamin Emanuel, who actually was a gun runner for the Irgun, the Zionist, pre-Israel Zionist, militia that carried out numerous terrorist attacks on Palestinian civilians, including the bombing of the King David Hotel. Of course, Rahm Emanuel himself is not responsible for any of that, but his record is sometimes far to the right of President Bush when it comes to supporting Israel.

But I think the important thing here is not just the appointment of Emanuel, but the greater context here, which is that from the days we knew Barack Obama as a small-time politician in Illinois, I won’t tell you, and I’ve never said that he was incredibly progressive on Israel-Palestine, but he was certainly more open-minded than he is now. And what he’s done systematically throughout the campaign is to distance himself or to throw under the bus, as the term goes, any adviser or friend who was suspected of having pro-Palestinian sympathies. In other words, he has succumbed to the McCarthyite and racist campaigns that says if you associate with even very moderate Columbia University professors, for example, or take their advice, that that’s the biggest crime.

So the signal he’s sending here is that that is not going to change, that people who could give him more balanced, more objective, more realistic advice that could change the course from the disastrous Palestine-Israel policies of the Bush and Clinton administrations, that that’s not going to happen. And that should be very, very (worried), because a lot of progressive people, a lot of people in the Middle East, a lot of leaders, have pinned hopes on Obama being quite different on this issue, and I just don’t see any evidence so far that that’s going to be the case. And it worries me that people will stay silent, rather than putting on the table now and loudly the demands for a more balanced, more objective, more fair policy that could bring peace for Palestinians and Israelis.

JG: And you mentioned a Columbia University professor, obviously referring to Rashid Khalidi. The reaction of the Obama campaign to the attempts by some supporters of John McCain to link him to Khalidi, how Obama responded to that?

AA: I think that I am going to be very frank. I know that -- I agree with the other speakers that the euphoria and joy felt at Obama’s victory is sincere and justified, in terms of people’s hopes and desire for something different, but I think Obama’s reaction all along to the claims that he’s a secret Muslim or that he supports Palestinian rights has really been disgraceful. Rather than saying, you know, "So what if I had been a Muslim?" or "So what if I listen to different advice? Our policies have been unbalanced, and we want to take a wide range of advice" -- instead of saying that, he’s really played into the McCarthyism by saying, "No, you know, I didn’t know Rashid Khalidi." Well, the fact is, he was very happy to associate with Rashid Khalidi and with the broader Palestinian American community for many years.

What does it say that the sort of things he was prepared to do just a few years ago he is no longer prepared to do, that he didn’t visit a single Muslim community center or mosque or associate publicly with Arab Americans during the campaign? And it’s not as if, the day after the campaign, he started to send more conciliatory signals. On the contrary, there could not be a more provocative appointment than Rahm Emanuel, if he wanted to send a signal that he is going to stick by a quite hard-line pro-Israel policy.

AG: Last June, on his first day as the Democrats’ presumptive nominee, Senator Barack Obama addressed AIPAC, the American Israel Public Affairs Committee.

Sen. Barack Obama: Let me be clear. Israel’s security is sacrosanct. It is non-negotiable. The Palestinians need a state -- the Palestinians need a state that is contiguous and cohesive and that allows them to prosper, but any agreement with the Palestinian people must preserve Israel’s identity as a Jewish state, with secure, recognized, defensible borders. And Jerusalem will remain the capital of Israel, and it must remain undivided.

AG: That was Barack Obama last June. Ali Abunimah, you write a moving piece about watching Barack Obama over the years, from when you first met him as a state senator and what he meant to you then, when you heard him speak at the University of Chicago.

…

AA: Well, basically, the point I want to make is that Barack Obama has painted himself into a corner by appealing to the most hard-line pro-Israel elements in this country, by distancing himself from all advisers, even very mainstream establishment figures like Zbigniew Brzezinski, Robert Malley, who was one of Clinton’s officials who is considered by the pro-Israel lobby to be too pro-Palestinian.

And what he’s done is he’s publicly embraced people like Dennis Ross and Martin Indyk, two of the most pro-Israel officials from the Clinton era, who are totally distrusted by Palestinians and others across the Middle East, because they’re seen as lifelong advocates for Israeli positions.

And so, he’s made it impossible or extremely difficult for himself to say, "Look, now we’re going to talk to a wider range of views. We’re going to talk to those excluded voices that could give us advice that could actually get us out of this mess in Israel-Palestine." And that’s very worrying.

And I think that progressive people across this country, you know, instead of basking in the euphoria, need to pick themselves up today and start demanding that the Obama administration immediately end the siege of Gaza. It’s totally indefensible. It is a crime unprecedented in modern history that 1.5 million people are confined to a ghetto, starved, cut off from the world, threatened. This is indefensible, and there’s no excuse for it to continue even for a single day under a new administration. And we should be setting the standard very high, not accepting slight hints that in a few years’ time an Obama administration might accept a Palestinian state or might talk about one. The days for that are over. The situation is urgent, and we really need to see radical change. It’s not going to come from Rahm Emanuel and Dennis Ross and Martin Indyk; it’s only going to come from a groundswell demanding that the promises of change be kept.

AG: Ali Abunimah is co-founder of the Electronic Intifada and author of the book One Country: A Bold Proposal to End the Israel-Palestine Impasse … We’re going to go to Mexico City to Laura Carlsen. Laura Carlsen is the director of the Mexico City-based Americas Policy Program at the Center for International Policy. Can you talk about the response in Mexico and talk about the significance of Barack Obama for Latin America, Laura Carlsen? At the top of the show, we played a response by President Chavez of Venezuela, who was congratulating Barack Obama.

Laura Carlsen: Good morning, Amy. Yes, I’ve heard many U.S. pundits say that the election of Barack Obama doesn’t change the U.S. image in the world overnight, but actually, and certainly in the case of Latin America, it has. The first and most obvious reason is that much is being made of the fact that the nation was able to break through enormous racial barriers to elect an African American president. And that’s major in countries that are also struggling with diversity and discrimination. Of course, many are still skeptical about how much change there will actually be under Barack Obama, but the fact that the U.S. political system showed this kind of capacity for change and this level of citizen participation, that was really not thought possible after the two Bush elections, has made a big impression on people.

One of the most important things that they see coming out of this is that Barack Obama is not George Bush or his ilk. George Bush, of course, had one of the lowest approval ratings in Latin America in history. And there’s a lot of hope, despite many of the caveats that we’ve heard from the other speakers, that there will be a change of policies from the George Bush policy of unilateralism and U.S. hegemony in the region. These policies, if they haven’t been exactly interventionist in the Latin America region, have consisted of bullying to accept Washington’s positions, particularly on economic models and on U.S. foreign policy, and also methods of economic and diplomatic isolation for any country that didn’t comply with Washington’s conservative social policies or its orthodox neoliberal economic policies. There’s been a tremendous inflexibility and unwillingness to enter into real dialogue with nations in Latin America, and that’s caused a lot of resentment. Now, with Obama’s statements that he will enter into dialogue with Venezuela and Cuba, some indication that there will be a modification of free trade policies, there is a lot of hope that a new era can begin in US-Latin American relationships.

JG: What about the situation with the expanding drug war in Mexico and what you would expect from an Obama presidency?

LC: This is the point of most concern: militarization, and particularly within the hemisphere. And here is where Obama’s policies have shown little change from the Bush administration, that launched the drug war here in -- or supported it, because it was actually launched by President Calderon in Mexico, and has supported it also in Plan Colombia. Those policies in the Latin America platform plan an expansion of that.

And here in Mexico, the violence that has resulted from this model of enforcement and interdiction under Plan Mexico is appalling, and it’s growing on a daily basis, now hitting high members of government, as well as many citizens caught in the crossfire between this war model of the state versus the drug cartels. So, one of the things that people will be looking very closely at here in Mexico is if there is any change in this. We know that this is a model that doesn’t work. There’s a lot of evidence of that. And so, the hope is that with people in the United States pushing toward some modifications in that and a less militarized package of aid to Mexico, there could be some change there, because this is a very, very grave situation.

AG: Laura Carlsen, the latest news of the number two man for Calderon dying in the plane crash on U.S. Election Day on Tuesday, killing Mexico’s interior minister, Juan Camilo Mourino.

LC: Yes. This, of course, is one of the most shocking pieces of news to come out in recent days. The government is calling it an accident, but as more and more investigation comes out, there were no emergency reports from his plane before it went down, apparently, according to the press. And so, of course, there’s an investigation being made, and there’s a lot of rumors going around and a lot of confusion and suspicions within the populace that this was in fact not an accident. And that would mean that the ante’s been up to an enormous level in this war between the drug cartels, if it should result that they’re involved in this, and the government, and that a complete rethinking has to be made before the country disintegrates into a level of violence that it hasn’t known since war.

JG: I’d like to turn back to London to Tariq Ali, who is there, veteran journalist, commentator and activist. He was born in Pakistan and lives in London. Tariq, your reaction to the election of Barack Obama and to what it might mean for your native land, Pakistan?

Tariq Ali: Well, I mean, my reaction was not so different to that of other people you’ve already interviewed. I mean, historically, the fact that there’s going to be a black family in the White House can’t be underestimated in terms of the impact that will have on black consciousness in the United States. I think it’s important in its own right for that reason.

As for what the policies are going to be, the situation is pretty depressing. I mean, Obama, during his campaign, didn’t promise very much, basically talked in cliches and synthetic slogans like "change we can believe in." No one knows what that change is. In foreign policy terms, during the debates, his -- what he said was basically a continuation of the Bush-Cheney policies. And in relation to Afghanistan, what he said was worse than McCain, that we will actually -- we should take troops out of Iraq, send them into Afghanistan and, if necessary, go in and take out people inside Pakistan without informing that government.

Now, I think once he is in power and sees the intelligence reports coming in from Afghanistan, he will realize that that’s not a serious option. I mean, the British are already saying that sending in more troops isn’t going to help, because the war is lost. The United States intelligence agencies are already involved in panic discussions with the people they are fighting, the neo-Taliban, to try and persuade them to join the coalition, which they’re refusing to do as long as there are foreign troops there. So, escalating the war I don’t think is a serious option. And if he does it, it will be a very, very serious mistake, on the same level in scale as invading Iraq. So, he would be very ill-advised to do it. And I think some of the people around him will probably tell him that that was a foolish and intemperate remark in the heat of an election battle, so not to seem too wimpish, since he was already supposedly opposed to the war on Iraq, and that he will pull back from that.

I think the key is what he’s going to do in Iraq. Is Iraq, as Joe Biden wants, going to be balkanized, with permanent U.S. bases in northern Iraq and a Kurdish area, more or less, kept going as a U.S. Israel protectorate? Or, are they going to do what the U.S. traditionally does, long before the "war on terror," which is find local relays? And in that case, I think they’ll have to do a deal with Iran. And I think the most critical interview with Ahmadinejad on his last visit to New York was Amy questioning him about his position on the Iraq war, etc. He got a very easy ride on CNN and other shows, which indicates that they will be asking Iran to play a role in stabilizing Iraq, and they will be asking Pakistan to do the same in Afghanistan. That is more traditional U.S. policy. And if Obama moves in that direction, it will mean withdrawing troops and having an exit strategy in Afghanistan.

AG: Tariq Ali, we’re also joined in Washington, D.C. by the Iraqi blogger and political analyst Raed Jarrar, Iraqi consultant for American Friends Service Committee. Raed, the latest news today, at least six people have been killed, more than 20 wounded, in several bombings around Baghdad. At least thirty Iraqis have died, eighty wounded, since Monday. And you might say that Barack Obama is president today, because in 2002 he made that speech against the war in Iraq. That, I think, won him the Democratic nomination against Hillary Clinton. I don’t think the Democratic Party emphasizes this now, but that was the main difference, as she and the other leading opponents of Barack Obama in the presidential campaign voted for the invasion, and he spoke against it. What are your hopes, Raed?

Raed Jarrar: Well, I think the Obama campaign did deliver a message to the public in the U.S. that he will be the one to end the occupation. And wherever I travel around the U.S., people do have the impression that Obama will be the president who will withdraw the troops. The campaign was very vague about describing troops’ withdrawal, all the troops, within 16 months.

Now, the fine print of the campaign suggests the opposite, actually. The fine print suggests that Obama will continue the same policy through leaving what he calls "residual force," the thing that both Bush and McCain wanted to leave indefinitely. So I don’t have a lot of hope, based on the statements. Now, no one knows what will happen in the next few months, whether Obama will, you know, unveil this progressive face that everyone is waiting to see, or whether he will continue the same policy.

Now, on the shorter term, I think there is a major difference, that I’m happy that the Obama-Biden campaign have came out to criticize the long-term agreement. On their website, there is a very strong statement asking the Bush administration to either submit any agreement with Iraq to the Congress or postpone it until the next administration and Congress. I think this is a very important step on the short term, but I don’t have a lot of hope regarding the statements on the long term. I hope that there will be a modification of that policy to a new policy that is based on a complete withdrawal, that leaves no permanent bases, no mercenaries in Iraq, because without that policy, I think the situation in Iraq will continue to deteriorate.

JG: And I’d like to come back to Mahmood Mamdani here with us in the studio. You’ve heard now quite a bit of skepticism about the potential in the new Obama presidency. Your thoughts? I think you’re sensing a little bit more optimism?

MM: Well, I mean, my sensing is that we have to place the man within the context. I am equally skeptical of those who believe Obama is capable of everything as I am of those who believe he is incapable of anything. He’ll simply be muzzled by context.

I think that, you know, this campaign began as a campaign on the question of peace. He began as a peace candidate and ended up as a redistribution candidate. Foreign policy had the front seat at the beginning and had the back seat towards the end of the campaign. So we don’t really know much.

What we do know is that any president who wants to make an impact on history can only do so at a moment of crisis. And this is a moment of profound crisis, domestically and internationally. Obama’s campaign announcements, I believe, give us very little clue as to what he is going to do. His appointments, I agree, give us some clue, and there is reason for concern. But at the same time, there will be returns coming in if the appointments lead to the policies that we fear they may lead to. It’s a time of possibilities, and it’s a time to organize and put the pressure.

AG: We have to leave it there. I want to thank you very much for being with us. Last question, though: do you think the movements that elected Obama can, without the Obama machine, remarkable online and on-the-ground organizing, what, ten million e-mail list -- we were getting texts and emails every couple of hours -- can reconstitute itself without that? Because now that will be the state. How do people show their -- express their positions if they differ from the state?

MM: Has the movement been absorbed into the state? Look, there’s a remarkable difference between the youth movement of the ’60s, which mainly organized outside the system, and the youth movement which has brought Obama to power, because this movement has organized within the system to reform the system. Obama keeps on saying that this movement must not go away, that change hasn’t come, that this is the beginning of change. Now, will the candidate be able to tame the movement, or will the movement be able to stamp itself to some extent in the coming days?

AG: We’ll leave that question there. Mahmood Mamdani and all of our roundtable, thanks so much for joining us.

Wall Street Fat Cats Are Trying to Pocket Billions in Bailout Cash

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By Nomi Prins

The election results pretty much confirmed the extent to which Main Street is rightly livid about the Wall Street mentality that led to our financial crisis. During his historic victory speech, President-elect Barack Obama told supporters, and the rest of the world, "If this financial crisis taught us anything, it’s that we cannot have a thriving Wall Street while Main Street suffers."

But, it seems that Wall Street didn’t get that memo. It turns out that the nine banks about to be getting a total equity capital injection of $125 billion, courtesy of Phase I of The Bailout Plan, had reserved $108 billion during the first nine months of 2008 in order to pay for compensation and bonuses (PDF).

Paying Wall Street bonuses was not supposed to be part of the plan. At least that’s how Federal Reserve Chairman Ben Bernanke and Treasury Secretary Hank Paulson explained it to Congress and the American people. So, on Oct. 1, when the Senate, including Obama, approved the $700 billion bailout package, the illusion was that this would magically loosen the credit markets, and with taxpayer-funded relief, banks would first start lending to each other again, and then, to citizens and small businesses. And all would be well.

That didn’t happen. Which is why it’s particularly offensive that the no-strings-attached money is going to line the pockets of Wall Street execs. The country’s top investment bank (which since Sept. 21 calls itself a bank holding company), Goldman Sachs, set aside $11.4 billion during the first nine months of this year -- slightly more than the firm’s $10 billion U.S. government gift -- to cover bonus payments for its 443 senior partners, who are set to make about $5 million each, and other employees.

Whereas Wall Street may not believe in higher taxes for the richest citizens, it does believe in higher bonuses for the head honchos. No matter what the market conditions are on the outside, steadfast feelings of entitlement tend to prevail.

Last year, when the financial crisis was just brewing, the top five investment banks paid themselves $39 billion in compensation and bonuses, up 6 percent over 2006. Goldman’s CEO, Lloyd C. Blankfein, bagged a record bonus of $60.7 million, including $26.8 million in cash. That amount was nearly double the $38 million that Paulson made at the firm in 2005, the year before he became the Treasury secretary, a post for which he received unanimous approval from the Senate on June 28, 2006.

Two of those firms, Bear Stearns and Lehman Brothers, went bankrupt this year. Bank of America is acquiring a third, Merrill Lynch. Shares in the remaining two, Morgan Stanley and Goldman Sachs, took a 60 percent nosedive this year.

Yet, that didn’t stop their campaign contribution money from spewing out. Goldman was Obama’s largest corporate campaign contributor, with $874,207. Also in his top 20 were three other recipients of bailout capital: JP Morgan/Chase, Citigroup and Morgan Stanley.

Last week, House Oversight Committee Chairman Henry Waxman, D-Calif., gave the bailout capital recipient firms until Nov 10 to come up with some darn good reasons to be paying themselves so much (PDF). Specifically, he requested detailed information on the total and average compensation per year from 2006 to 2008, the number of employees expected to be paid more than $500,000 in total compensation, and the total compensation projected for the top 10 executives.

Similarly, New York state Attorney General Andrew Cuomo demanded information about this year’s bonuses, including a detailed accounting of expected payments to top management and the size of the firms’ expected bonus pool before and after knowing that they would be recipients of taxpayer funds.

The deadline Cuomo set for receiving bonus records was Nov. 5. Predictably, the firms in question requested more time as the date approached -- it takes a while to massage numbers, after all.

Meanwhile, they have been subtly releasing data to the media regarding how much lower bonuses will be this year, in order to combat inspection and criticism. This is Wall Street in its best defense mode, projecting an aura of accommodation and self-pity (because it’s shedding jobs, too), in order to maintain a status quo state of self-regulation.

House Financial Service Committee Chairman Barney Frank is holding his own oversight hearing on the matter next week, having announced that "any use of the these funds for any purpose other than lending -- for bonuses, for severance pay, for dividends, for acquisitions of other institutions, etc. -- is a violation of the terms" of the bailout plan.

Banks are going to tell Congress that of course they won’t use that $125 billion for bonuses -- it will go to shoring up balance sheets and for acquisitions just like they promised. And bonus money will come from earnings, as it always does.

If it sounds like accounting mumbo-jumbo, that’s because it is. It doesn’t matter where in the balance sheet capital comes from or goes, the point is there’s more of it because of taxpayer redistribution in the wrong direction than there would have been otherwise, and that’s not just. This begs the larger question: Why pay bonuses in a year of massive financial destruction, anyway?

"Exactly," says Gar Alperovitz, co-author, with Lew Daly, of the new book Unjust Deserts. "We’re making homeowners take a big hit, and if there’s any justification for any of these bonuses -- which is dubious -- sharing that burden is important."

But that’s not quite the sharing that Wall Street wanted from the bailout package. Yet, if "change has come to America," as per Obama’s promise, then it’s high time for Wall Street to shoulder its part -- starting with this bonus season. A decisive move by Obama on this topic would go a long way toward solidifying the central promise of his campaign.